Johnston v. Forsyth Mercantile Co.
| Decision Date | 01 January 1904 |
| Citation | 127 F. 845 |
| Parties | JOHNSTON v. FORSYTH MERCANTILE CO. |
| Court | U.S. District Court — Southern District of Georgia |
Hardeman Davis, Turner & Jones, for trustee.
Robert L. Berner, for defendant.
This is a suit in equity by a trustee in bankruptcy to recover certain assets of the bankrupt from the possession of a third party. A proceeding in involuntary bankruptcy was filed on the 23d day of June, 1903, against the Stewart-Taylor Company, a mercantile corporation in the town of Forsyth. On July 15th following a adjudication was had. The bill brought by the trustee alleges that a short time, prior to the day on which the petition in bankruptcy was filed, the chief asset of the bankrupt corporation was a stock of dry goods notions, boots, shoes, and millinery, and other merchandise worth about $6,000. This stock was fresh and in good condition, and a large part of the purchase price remained unpaid. It is further alleged that on June 21, 1903, the bankrupt company was hopelessly insolvent; its business was notoriously unsuccessful; its secretary and treasurer and acting business manager had been absent for weeks; that it owed its creditors about $9,000; and that its only assets were the stock of goods above mentioned, and a few notes and accounts, which would not exceed over $200. It is further alleged that this insolvent condition was fully known to its officers; that the rents were unpaid, as were the wages of its clerks; that creditors were pressing their claims for collection; that these facts were known to the Forsyth Mercantile Company, but, notwithstanding this knowledge, the bankrupt corporation sold, and the Forsyth Mercantile Company bought, the entire stock of goods of the bankrupts for the agreed sum of 75 per cent. of the invoice price of the shoes 50 per cent. of the invoice price of the millinery, and 70 per cent. of the invoice price of the remainder of the stock. It is alleged that this was greatly below the actual market value of the merchandise (in other words, that the price was grossly inadequate); that the sale was conducted at night, and with great secrecy; that in the morning after the sale, before business hours, the purchaser paid over to Taylor, one of the bankrupts, the sum of $3,850, before an inventory had been taken of the merchandise, and this was paid so hastily that the sum of $405.14 had to be refunded. It is charged that this sale and transfer was made to hinder, delay, and defraud the creditors of the Stewart-Taylor Company, represented by the complaining trustee, and that this intention was known to the Forsyth Mercantile Company. It is charged that this transaction passed no title, and that, in law and equity, the Forsyth Mercantile Company should be adjudged to hold the proceeds in trust for complainant, who, by virtue of his appointment, became vested with title thereto. While this is true, the Forsyth Mercantile Company, it is alleged, has mingled the goods thus bought with its general merchandise, and has sold a large portion thereof. Complainant avers that he is therefore remediless at law, and, waiving discovery, prays that the transfer and delivery of said merchandise to the defendant company may be decreed void; that the title to the goods in question may be decreed to vest in complainant, as trustee, and that the defendant company be decreed to hold the same in trust for him; that an accounting shall be had; and that a decree may be taken, requiring the defendant company to pay over to complainant the full value of the merchandise so converted.
The defendant the Forsyth Mercantile Company has interposed a demurrer upon the ground, first, that the complainant is not entitled to recover, and that there is no equity in the bill; second, upon the ground that the relief sought should be denied, because, while the complainant prays that the sale should be set aside for inadequacy of consideration, the complainant does not offer to refund the money actually paid by respondent, as he is in duty bound to do.
Jurisidiction of this proceeding is conferred by the recent amendment...
To continue reading
Request your trial
-
Dickey v. Volker
... ... chancellor should have heard the evidence. Jahn v. Lumber ... Co., 148 F. 631; Johnston v. Mercantile Co., ... 127 F. 845; Maull v. Campbell, 69 Fla. 541; Reed ... Fertilizer Co. v ... ...
-
Dreyer v. Kicklighter
... ... rendered by Judge Speer in the case of Johnston v ... Forsyth Mercantile Co., 127 F. 845 (4). See, also, the ... case Thomas et al. v. Beals, ... ...
-
Jahn v. Champagne Lumber Co.
...Furthermore, general demurrers are looked upon with favor when interposed to a bill charging fraud and conspiracy. Johnston v. Merch Co. (D.C.) 127 F. 845. these reasons the demurrer will be overruled, and defendants will be allowed to plead to the bill on or before the October rule day. ...
-
Backus v. Brooks
...Oyster System. Taking the broadest view possible of the facts and equity rule 32, I cannot accept the dicta found in Johnston v. Mercantile Co. (D.C.) 127 F. 845, Jahn v. Lumber Co. (C.C.) 147 F. 631. Those cases were both properly decided on the facts, and the reference to an uncited equit......